Hong Kong firms see improvement in corporate governance

Public companies listed on two Hong Kong indices have seen a major improvement in corporate governance, but there is still work to do, according to PwC Hong Kong.

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Public companies listed on the Hang Seng Index (HSI) and the Hang Seng Chinese Enterprise Index (HSCEI), have seen a major improvement, according to a new report by PwC Hong Kong.

The annual report said that 92% of the firms they reviewed have improved their internal controls and risk-management systems, which is a 23% increase from last year.

Regarding both of the Hong Kong indices, HSCEI has made the largest gain, with a 25% increase in the number of firms that are making appropriate disclosures.

According to the report, the HSCEI has made a noteworthy attempt to improve disclosures in managing and identifying risk, with now 80% of companies on the index now showing this information—a rise by 57% from last year.

“Since the amended corporate governance code became effective, many of the large-cap listed companies have enhanced their level of disclosure on internal control and risk management,’ said Eric Yeung, PwC Hong Kong risk assurance partner, in a press statement.

“We are particularly happy to see a significant improvement in the HSCEI constituents. The results [show] that companies recognize the positive effect of enhancing corporate governance.”

Not everything has been improved though, and Hong Kong-listed companies still have work to do, according to PwC. Although 97% of firms claim to have an internal audit function, only 36% disclose sufficient resources, qualifications and experienced internal audit staff.

Currently, the Hang Seng Family of Indexes comprises more than 400 real-time and daily indices. Hang Seng Indexes will continue to broaden its index series to meet the widening spectrum of investor demand for index investment solutions.

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